Starting out on the right foot
We understand that for many contractors setting up a new business can be a daunting time and at SG Accounting we strive to make the process as easy for you as possible. Our service deals with all of the company accounting and tax compliance and includes unlimited support during the year, so no need to worry about any additional bills if you need to ask us a question!
There are a number of forms to fill, accounts to prepare and deadlines to meet over the course of a year however SG Accounting are supporting you every step of the way.
Your accounting spreadsheet (monthly)
In order for us to complete the various accounts, forms and tax returns during the year we do require information from you. However we have tried to make the process as easy as possible for you with an accounting spreadsheet to record all of your invoices and expenses. The accounting spreadsheet is sent to you annually and has a separate worksheet for each month. We ask that you complete the spreadsheet monthly and email to us shortly after the end of each month. We will then review the information in the spreadsheet, ensuring everything is completed correctly, reconcile the main accounts so everything ties up, and advise where appropriate on ways in which you can improve the tax efficiency of your business (for example, maybe there are tax deductible expenses that you have not considered or a different VAT scheme to use?).
We can also provide “management accounts” during the year which will give you an idea of how the business is doing, how much tax you should have put by (so you can budget for this in the future) and an idea of personal tax liabilities based on dividends you have taken or could take from the Company.
VAT Returns (quarterly)
VAT returns are completed quarterly throughout the year based on the accounting spreadsheet you submit to us. The return is prepared and sent to HMRC online and shows the VAT you have charged your client (currently 20% in the UK) and the VAT you claim on purchases.
Most contractors are better off using the VAT Flat Rate Scheme and therefore the VAT return will show the total you have invoiced your client that quarter and the flat rate % applied. The total is then paid over to HMRC within 1 month and 7 days of the end of the quarter. There is a useful 1% discount for new businesses registering for the Flat Rate scheme.
A quick example:
An IT Contractor has raised 3 invoices totalling £30,000 + VAT = £36,000 in their VAT quarter ended 31 May. They are registered under the Flat Rate VAT scheme using a percentage of 16.5%.
Total VAT payable is:
£36,000 x 16.5% = £5,940 and is due to be paid to HMRC by 7 July.
All we ask from you is that you have sent us your accounting spreadsheet for the quarter so that we can prepare your VAT return and then file on your behalf. We will then advise you on the amount to pay HMRC, how to pay it and when.
Payroll (monthly, quarterly and yearly)
Although you might not have employees in the traditional sense of the word it is generally more tax efficient to set up a payroll scheme to allow you and sometimes a spouse or partner to withdraw tax free profits from your business. You will normally pay your “wages” from your Limited Company to your personal bank account on the last Friday of every month. We will advise at the start of the payroll year (runs from April to March) how much to pay each month. All you need to do is remember to pay yourself!
Depending on your other income and the level of salary chosen there may be additional Income Tax and National Insurance Contributions (NICs) due through PAYE. We will calculate the total Income Tax and NICs due and let you know how much to pay, how to pay and when. Generally tax and NICs are paid quarterly by 5 April, 5 July, 5 October and 5 January) so look out for an email from us around those times.
We will run the payroll scheme and submit monthly and annual Real Time Information (RTI) returns to HMRC on your behalf.
Limited Company Accounts and Corporation Tax (yearly)
Every Limited Company has a “year end” sometimes referred to more formally as an “Accounting Reference Date”. This is usually around 1 year after the Company was set up. After every year the Company must prepare Annual Accounts and Corporation Tax Returns. We will prepare these for you and again will be based on the accounting spreadsheet you have sent to us during the year. Once we have completed we will ask you to approve and then we will submit to Companies House and HMRC. The deadline for submitting the accounts and paying over the Corporation Tax is generally 9 months after the year end. Again we will calculate the Corporation Tax due and advise you how much to pay, how to pay and when.
A quick example:
A Limited Company has invoiced £60,000 + VAT during the year and has tax deductible expenses of £15,000. The year end is 31 January.
|Profit before Tax
|Corporation Tax at 19%
|Profit after Tax
Corporation Tax of £8,550 is payable to HMRC by the end of October .
Companies House Annual Confirmation Statement (yearly)
Every year on the anniversary of your Company’s incorporation a confirmation statement is required by Companies House. This details any changes in shareholders, directors, or registered office address (no financial information is required for this return). Again we will take care of preparing and submitting this for you.
Self Assessment Tax Return (yearly)
As the Director of a Limited Company you will now be required to submit a Self Assessment Tax Return (SATR) to HMRC each year and guess what….we will take care of this for you as well!
We will produce the return based on your accounting spreadsheet and the accounts we prepare during the year and will ask you to let us have details of other personal income you may have outside of the Limited Company e.g. bank interest, child benefit, pensions, shares, buy to let property etc.
Unlike your Company “year end” everyone in the UK has the same personal tax year and this runs from 6 April to 5 April the following year. Income during those dates is recorded on the Self Assessment Tax Return and this is due to be submitted by the following 31 January. So a Self Assessment Tax Return for the year 5 April 2017 to 6 April 2018 is due to be filed with HMRC by 31 January 2019.
Any personal tax due is generally payable on 31 January and 31 July. The payments dates will differ depending on how much tax you have to pay, however we will advise you exactly how, when and where to pay.
As you can see there is a long list of things to do during the year however you don’t need to remember them all….we are here to support you and give you some gentle reminders along the way.
Everything really flows through from your accounting spreadsheet so sending this into us regularly means we can take care of the compliance and also give you some really great, up to date tax planning advice during the year!
Please remember we provide an “all-inclusive” service so any questions at all please just ask.